How to Cut Annual Expenses for Your Business
Business owners are always looking for ways to cut costs without sacrificing on quality. This means that the best cost-cutting measures are within peripheral areas of the company. Here are three areas where you can save money without compromising your core functions.
Save on Software
Technology is a vital part of your infrastructure, and the right software can save you time and money. However, many businesses have purchased more software than they need. There are ways to retrench when it comes to software acquisition. First, cut duplicate software products. As you assess your current software, you might find that you have several products that do the same thing. Pare these down to the one product that is the most useful. Second, utilize multi-functional software products. If you have a product that performs multiple useful functions, that is generally preferable to paying for multiple products. Finally, use free software with anything that isn’t something your industry requires to be top-of-the-line. When it comes to some of your more basic applications, free versions might be sufficient.
Reduce Your Taxes
There are a host of legal ways to give your small business a tax break. One way is to hire immediate family members, such as a child or spouse. If you are a sole proprietorship, you won’t be required to pay any social security or federal unemployment tax (FUTA) on your child’s salary. You can also avoid paying FUTA taxes on a spouse’s income. Furthermore, as a business owner, you should be informed as to what expenditures are tax deductible and take full advantage of those deductions. Be sure to include any business-related travel, tech, and other equipment expenses. You can even deduct a portion of your mortgage and utilities if you have a home office that is solely used for business. Finally, reduce your taxes by investing in a retirement plan with tax deductible contributions. A SEP-IRA is among the simplest retirement plans to set up and maintain.
Outsource Peripheral Functions
Businesses that try to fulfill every business function in-house often spend more money than they would by outsourcing non-essential functions. Costs are reduced with outsourcing by limiting the need for extra space, equipment, tech, training, and employees. Areas that are commonly outsourced include manufacturing, customer service, shipping, accounting, marketing, and sales.
The bottom line is that profits are derived in one of two ways—cutting costs and increasing sales. When you cut costs, you improve your bottom line even without increasing your sales.
Check out this article on how to receive payments for your small business!
